Kurdistan is a major oil and natural gas producing region, but its access to markets was cut late last year when the central government shut a pipeline that runs from Kirkuk to the city of Ceyhan on the Mediterranean coast of Turkey. The Kurds are now building their own natural gas pipeline into Turkey which they say can be converted to ship up to 300,000 barrels of oil per day — and be completed by June of this year.

Hussein described those plans as “overly ambitious” this week. But his government has a stake in trying to convince foreign partners that the Kurds are unable to meet their promises.

In particular, it seeks to persuade supermajor ExxonMobil, which signed an oil exploration deal with the Kurdistan Regional Government in November 2011, to abandon its plans to develop oil production in the north. Hussein on Tuesday reiterated Iraq’s warning that if the Americans start to drill in territories that are disputed with Kurdistan, “there will be a legal response” that he said could “end” all of the company’s work “in the rest of Iraq.”

Yet the central government reportedly improved the terms of Exxon’s participation in the exploitation of oilfields in the south as recently as January. The company recognizes that Iraq is so dependent on oil revenue, it cannot afford to shut them out, whatever they decide to do in Kurdistan.

The oil industry accounts for some 75 percent of Iraq’s gross domestic product and up to 90 percent of state revenues. Late last year, the country overtook Iran as the second largest producer in OPEC, the twelve-member cartel of oil exporting nations.

If there’s to be any foreign pressure, it must come from the United States, which, despite withdrawing its troops from Iraq in 2011, has a stake in preventing it from breaking up, and Turkey, the main beneficiary of an independent Kurdish export capacity.

Vice President Joe Biden greets Kurdish Regional President Massoud Barzani on arrival at the Kurdish International Airport in Irbil, Iraq, December 1, 2011 (White House)

Iraq has also restored ties with Russia, signing an agreement in October of last year to buy more than $4.2 billion worth of arms from Moscow — putting Iraq in the almost unique position of procuring weapons from Russia and the United States simultaneously.

Maliki’s rapprochement with Iran and Russia makes strategic sense from his perspective. Without the significant American military presence in his country, Iraq is vulnerable and can ill-afford to maintain anything but amicable relations with its powerful neighbor Iran which is allied to Syria. Naturally, lawmakers in Washington DC perceive this as Iraq drifting into the Iranian camp and will therefore likely block sophisticated weapons sales like fighter jets. Hence the Russian deal.

Turkey is in a much stronger position to interfere in the row between Baghdad and the Kurds — and they both know it. Maliki has called his neighbor a “hostile state” for interfering in the dispute and accused his Turkish counterpart Recep Tayyip Erdoğan of seeking “hegemony” in the Middle East. A spokesman for Maliki’s government argued last July that Turkey was “participating in the smuggling of Iraqi oil” and warned, “This issue will influence the relationships between the two countries.”

Iraq’s oil minister Abdul Karim Luaibi claimed last month that Turkey had agreed to cancel plans to import Kurdish oil via the pipeline, something the Kurds deny. They have begun exporting oil by truck. Some fifteen cross the border daily to bring crude into Turkey.

Map of Iraqi Kurdistan (Wikicommons)

More than half of Turkey’s $12 billion trade with Iraq was with the Kurdish region in 2011. That share will have risen last year as a result of the oil trade and will likely rise further this year. Turkish exports to all of Iraq have tripled in the last four years.

Neither the central government in Baghdad nor the Kurdistan Regional Government in Erbil stand to gain from escalation of the oil dispute, yet neither has a strong incentive to give in. The Kurds fear they’ll lose the autonomy they’ve been granted under the constitution of 2005 if Baghdad controls the oil flow. Maliki’s government in Baghdad similarly worries that if the Kurds maintain their export independence, it could lead to de facto secession and ultimately the demise of Iraq as a state.

Maliki’s problems are compounded by political strife. The aforementioned Russian arms deal was marred in corruption allegations which threatened to destabilize his cabinet. The prime minister had reached out to mainstream Sunni lawmakers and more radical Shias to maintain his majority, but that coalition looks precarious at best and Maliki is still expected to lose the 2014 election, prompting another wave of sectarian unrest. If in the midst of that, the Kurds push for greater autonomy, other groups — the Sunnis if the Shia maintain power or vice versa — could demand the same.

If the outcome is an independent Kurdistan and a majority Sunni state in the west of the country, bordering Saudi Arabia and Syria, it is one the Turks, Sunnis themselves, could probably live with.